Troops Sunday fired artillery at positions held by an Islamic militant faction in the southern Philippines as more soldiers deployed against the group, which staged a deadly bombing in President Rodrigo Duterte's home city.

Troops used 105 mm artillery to blast the positions of the Maute group in the nearly deserted town of Butig in the second day of fighting since the gunmen -- who claim allegiance to the Islamic State group -- occupied Butig's abandoned town hall.

Mortar bombs could be heard in the distance as an MG-520 helicopter gunship flew overhead, a reporter in the town said.

Most of the 17,000 residents of the largely Muslim town on Mindanao island fled to evacuation centres in neighbouring towns or to relatives elsewhere after the Maute incursion on Saturday, said Mayor Dimnatang Pansar.

"We can't fight the Maute with only 20 policemen," he said, appealing for more soldiers to be assigned there.

Only a few residents stayed in their homes as armoured vehicles and military snipers fanned out through the town streets, slowly advancing on the Maute group's position.

Armed forces spokesman Brigadier General Restituto Padilla, citing what he called "intelligence sources", said 11 of the militants had been killed and five wounded.

Padilla said their bodies had not yet been recovered. Two soldiers were wounded in the battle, he added.

Reporters in Butig said the military had obtained photographs showing the Maute group flying the black IS flag over the old town hall.

However they themselves were not allowed to get close enough to verify this.

Another military spokesman, Colonel Edgard Arevalo, said this symbolic action was expected.

"They have long been professing allegiance to the foreign terror group. This is still part of the Maute group's agenda in courting support and encouraging similar-minded individuals to support ISIS," he said in a statement, using another acronym for IS.

The Maute group is one of several armed Islamist organisations in Mindanao which have pledged allegiance to Islamic State fighters in Iraq and Syria.

In past clashes with troops, its members were seen carrying black IS flags and bandannas bearing the jihadists' insignia were found in their base, the military said.

Three members of the Maute group were arrested last month, accused of the September bombing that left 15 people dead in Davao, Duterte's home town and Mindanao's largest city.

Government forces captured a Maute training camp in the town in June after a 10-day gunbattle that left four soldiers and dozens of militants dead, according to an army account.

The Maute group, once described by the military as a small-time extortion gang, attacked a remote army outpost in Butig in February, triggering a week of fighting that the military said left six soldiers and 12 militants dead.

The group also beheaded two employees of a local sawmill in April, the military has said.

strs-mm/sm